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But Argues That Surge Pricing Encourages More Drivers to Pick Up Passengers

Published on December 15, 2014.

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Uber offered users in Sydney's central business district free rides after first increasing fares during the hostage crisis today, adding to the public relations struggles facing the mobile car-booking company.

During the siege at a Sydney cafe, where a gunman held hostages for about 17 hours before police stormed the location, Uber pushed up its fares for riders in the area, a move known as surge pricing. After people took to social media to complain about the increase using the hashtag #ubersydney, the company posted on its blog that it was refunding those rides and offering free ones.

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"We are all concerned with the events happening in Sydney," Uber said on its blog. "Please note that surge pricing is used to encourage more drivers to come online and pick up passengers from the area."

A representative for Uber didn't return a call for comment.

The situation is another controversy for Uber, which is embroiled in multiple contentious incidents as it rolls out its service in more than 250 cities worldwide. The app, which lets people hail rides from their smartphones, has attracted criticism from taxi and limousine industries and regulators as it sometimes flouts local laws to begin its service. France today said it plans to ban the company's UberPop service starting Jan. 1.

The company, led by CEO Travis Kalanick, has also drawn controversy for comments from its brash executives. Last month, top Uber executive Emil Michael said the company was willing to pry into journalists' private lives, prompting criticism and an internal review of its data-privacy policy.

Surge pricing
Surge pricing -- where fares adjust according to demand -- has long been contentious. Uber has been criticized in the past for the practice during snowstorms and natural disasters that caused demand to spike. In July, the company reached an agreement with New York Attorney General Eric Schneiderman to cap fares during emergencies and natural disasters.

In Sydney, the surge pricing during the hostage crisis sparked an immediate negative reaction that Uber was trying to profit off the standoff. An Uber user in the city's central business district sent Mashable a screenshot of the app, showing it was charging at least $100 and as much as four times its normal rate.

"Demand is off the charts!" the app said. "Fares have increased to get more Ubers on the road."

Uber was valued at $40 billion in a fundraising earlier this month, making it the most valuable privately held U.S. technology company.